watching-yellen

Spot Gold Steady Ahead of Jackson Hole

August 24th, 2017 by

watching-yellen

Markets were quiet as Thursday morning saw the beginning of the annual meeting of central bankers in Jackson Hole, Wyoming. As investors wait to see what the world’s experts on monetary policy say about the state of the economy, trading volumes have been low. Spot gold was off by just $2 per ounce to $1,288/oz, but spot silver fell farther, losing 9¢ to trade at $16.99/oz. Platinum and palladium were each just a tick above unchanged.

Over last month, gold prices have advanced 3%. During that same stretch, the S&P 500 has lost about 2.5%.

Here’s a quick glance at Wednesday’s closing numbers:

Gold: $1,290.30/oz (+$5.90)
Silver: $17.08/oz (+10¢)
Platinum: $976/oz (unchanged)
Palladium: $926/oz (+$4)

Dow Jones: 21,812.09 (-87.80)
S&P 500: 2,444.04 (-8.47)
Nasdaq: 6,278.41 (-19.07)

Economic Data Rolls In

Although the uncertainty surrounding monetary policy and U.S. politics has many traders sitting on the sidelines to end the week, there was still plenty of fresh economic data to go around. Usually, this would have enough weight to influence market activity to some extent, but the attention of investors is elsewhere.

Nonetheless, the Wall St bulls got a slight boost when the Labor Department reported that weekly jobless claims came in below expectations. This suggests the labor market continues to be tight—although there are certainly dissenting voices who believe that there continues to be slack. Still, new filings for unemployment benefits remains close its lowest in over 40 years.

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The line between the Fed correctly interpreting labor market conditions and potentially getting the entire picture wrong is rather thin. An unemployment rate near 4% would historically be considered “full employment,” but we are living in unprecedented economic times. With so much of the job growth in low-wage or part-time positions, the central bank’s favored measure of unemployment may need to fall significantly farther to reach the economy’s full capacity.

In other news from the U.S., home prices have been rising quickly. This has caused new home sales to tumble to their lowest level in 7 months. Americans are finding it harder to secure a mortgage than during the last bubble, but the greatest activity seems to be in the more affordable end of the housing market rather than the top, like San Francisco or New York City.

The dollar was mostly steady, registering at 93.25 on the DXY index. Bonds rose again, with the yield on 10-year T-notes slipping another 2 basis points to 2.17%. Stocks fell in Asia overnight, but European indices were all in positive territory on Thursday. Crude oil prices were down again, as WTI crude traded around $48.25 per barrel this morning.

The low volume on the financial markets can be explained by many traders and investors waiting for some comments out of Jackson Hole. While the speeches could be a dud in terms of actionable signals from Fed Chair Janet Yellen or ECB President Mario Draghi, Bloomberg points out that “If nothing else, it’s a welcome distraction from U.S. politics.”

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.